Trust Updates Archive
(Jan. 11, 2008--Chicago, IL)--The U.S. Department of Labor has asked a federal court to permanently bar Fifth Third Bank and its co-defendants from acting as a fiduciary to any ERISA account and to pay some $30 million in restitution. The lawsuit was filed on December 28, 2007.
Fifth Third, as fiduciary, administers nearly $17 billion in total employee benefit assets.
The DOL's lawsuit alleges that the bank, as plan fiduciary and investment advisor, mismanaged the sale of real estate owned by a union pension fund. Prior to the bank's appointment, plan trustees invested more than $26 million to develop Detroit real estate, located at 1001 Woodward Avenue. In 2003, five years after the initial purchase, Fifth Third was appointed as investment advisor and given sole authority to manage and control the property, according to court filings. While the bank served as investment manager, an additional $1.8 million was invested in the property. In early 2004, the bank sold the property for $4.5 million on the recommendation of it real estate sub-advisor, Carey Milestone Advisors, LLC.
Carey Milestone is a co-defendant in the lawsuit. In addition to serving as the bank's advisor, the Ohio-based firm acted as selling agent, according to the DOL, which notes that the bank did not solicit other real estate brokers. John Schmitz, a Fifth Third vice president and plan fiduciary, is also named as a co-defendant.
The lawsuit seeks full recovery of losses, including interest, and to permanently enjoin all defendants from serving as fiduciaries or service providers to any ERISA-covered employee benefit plan.
The bank has not yet filed a response.
In 2007, the DOL recovered $1.5 billion in plan assets in over 3,000 civil actions.
For more on this topic, see the upcoming issue of Trust Regulatory News.
No statement in this issue is offered as or should be
construed as legal opinion or advice.
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